Consumer Action supports removal of Limited Merits Review

In response to the Federal Government’s announcement of several reforms in the energy market on 20 June 2017:

Announcement that the Federal Government will remove Limited Merits Review (LMR) by legislating:

“We welcome the removal of the energy pricing appeals regime that has regularly failed to deliver on its objectives. Known as LMR, it has cost households and businesses hundreds of millions of dollars each year.”

“Removing LMR will take away a cash-grab mechanism for networks that has diverted decisions away from the long-term interests of consumers and increased prices”

“LMR reforms in the past failed to adequately overcome the problems seen in the initial regime.”

Announcement of $67.4 million of additional funding for the Australian Energy Regulator to ensure it is fully equipped to address behaviour in the market that is pushing up electricity prices

“Energy is an essential service and there are numerous issues causing price rises that have significant impacts on those struggling to make ends meet. It is critical that the Regulator has adequate funding to keep the energy industry to account.”

All quotes attributed to Gerard Brody, CEO of Consumer Action Law Centre

The cost of building, operating and maintain energy networks—the poles, wires and pipes that transport electricity gas—make up around half the total cost of bills.

The prices for these networks are set by an independent regulator, the Australian Energy Re But network businesses can appeal these independent pricing decision to the Australian Competition Tribunal, thorough a process known as ‘limited merits review’ (LMR). Appeals have added billions of dollars to household bills.

The LMR rules were changed in 2013 to try and provide for more balanced outcomes. But network businesses have continued to use the LMR mechanism to add costs to household bills.